ST. LOUIS -- Mercantile Bancorp Inc. agreed yesterday to acquire Roosevelt Financial Group Inc. for $1.07 billion, as Missouri's second-largest bank prepares to compete with growing regional rivals, such as Boatmen's Bancshares Inc.
After the merger, Mercantile will have $30 billion of assets, 23 percent of all the money deposited in Missouri banks and thrifts.
Mercantile also said it would buy back as many as 7 million of its shares, or 11 percent, worth about $355.3 million at Friday's closing price.
"It looks like a fair deal for Mercantile," said Scott Edgar, bank analyst at SIFE Trust Fund, which owns 200,000 Mercantile shares. "The only disappointment for some shareholders is that they were hoping Mercantile would be the takeover target."
Roosevelt shares jumped $2.39 to close at $20.52 a share on the Nasdaq Stock Market yesterday. Mercantile shares fell $1 at $49.75 on the New York Stock Exchange.
The purchase comes as U.S. banks consolidate to cut costs and gain customers. Missouri has been active in mergers since Aug. 30 when Charlotte, N.C.-based NationsBank Corp. said it would buy St. Louis-based Boatmen's Bancshares, the largest bank in Missouri and four other Midwest states.
Mercantile said it will swap 0.4211 share for each Roosevelt share or $22 in cash based on its Friday closing price of $50.75. About 13 million shares will be paid to Roosevelt Federal's shareholders.
Mercantile's offer, 18 percent higher than Roosevelt's last closing price and about 1.9 times earnings, is reasonable because the thrift's stock has lagged behind its peers this year, Edgar said. Mercantile also is expected to cut expenses by eliminating redundant services in its home market.
"It makes them stronger, at least in the Missouri market," Edgar said. "They have some tough competition with NationsBank tied together with Boatmen's."
In October, Mercantile agreed to purchase Mark Twain Bancshares for $855 million and Regional Bancshares Inc. of Madison, Ill., for $41 million in August. It's currently the second-largest St. Louis-based bank with $18.2 billion in assets and branches in Missouri, Iowa, Kansas, Illinois and Arkansas.
Mercantile itself is widely considered a takeover target since it is the largest bank now based in the area.
Pub Date: 12/24/96